Although the decision to join the EMU among the first group of countries was made with the clear majority of the parties forming the five-party Rainbow Coalition government in April 1998, a lot of soul-searching and debate about the pros and cons of the EMU preceded this decision. Even today the electorate in Finland remains skeptical about the single currency, even if the decision to join is no longer an issue and did not play any role in our recent general election six weeks ago.

Finland, Sweden and Austria were not members of the Union when the Maastricht Treaty and the provisions concerning the EMU were adopted. Had we been members it is possible that we would have found ourselves in the same position as Denmark.

Our accession to the Union was decided by a referendum. In the referendum campaign the EMU was not a central issue. The government of the day preferred to downplay the question leaving the impression that the EMU was a future project the implementation of which was still quite uncertain.

However many of those, myself included, who campaigned for Finnish entry into the Union regarded the EMU as the most difficult and problematic part of membership and wanted a separate decision later on the issue. This was also the unanimous conclusion of our parliament when it ratified our accession.

I think it can be fairly concluded, that had a Yes-vote in the referendum been presented to the electorate as a binding and irrevocable decision to join the EMU it is likely, that the 57 % majority for accession would have turned into a minority. The same applies to Sweden where the majority for accession was much smaller.

In Finland we regard the EMU primarily as en economic project and thus evaluated the pros and cons of the project on that basis. We do not deny the self-evident benefits and dynamic effects of a single currency in a single market as the costs and risks of currency fluctuations are eliminated.

Indeed the need to eliminate purely speculative and harmful currency fluctuations has led the new Finnish government to support initiatives in introducing some kind of tax on currency transactions through broad international agreement.

The contentious word "Tobin-tax" is not used in the new government's manifesto, but the idea is the same. We should not underestimate the difficulties, both real and political, in implementing such measures, but neither should we underestimate the growing impatience of world opinion with our inability to come forward with effective countermeasures to overcome the unpredictable instability of global financial markets.

Currency realignments that reflect changes in the real economy as distinct from speculative fluctuations are of course another matter. Although the Finnish economy has evolved towards greater convergency with other EU economies during the 90's economists in our countries have questioned whether the Nordic countries form an optimum currency area together with the core EU-countries.

An economic analysis shows, that even if Finland met all the monetary convergence criteria of the EMU without resorting to the same kind of creative accounting which most of the other EU countries have had to rely on, there is still much less structural convergence of the Finnish and Swedish national economies with the EU then between the other EU countries, as measured by the correlation of business cycles or cross-trade.

Most people expect monetery union to enhance this kind of convergence but the opposite could also happen, i.e. more regional specialisation.

All existing monetary unions between divergent and developed economic regions in the world have either a national or federal budget which through taxes and income transfers will automatically even out most of those asymmetric demand shocks to which different regions from time to time are subjected to. This automatic mechanism is the more effective the larger the share of the budget in the country's GNP.

Thus this mechanism works most effectively inside the Nordic welfare states, but even in the relatively small-government USA the federal budget evens out around 40 % of the relative asymmetric fluctuations to which the American states are subject to. Thus the American states can have much more diverging economic structures and be dependent on outside asymmetric variations - e.g. Texas and the price of oil in international markets - than the EU countries without anyone raising even theoretical questions whether a given state might benefit from having its own currency. It should also be remembered that internal migration between the American states is exceeds migration between the EU countries by a factor of ten.

In the European Union there is no federal government with the competence to collect taxes and distribute income transfers. In the absence of such economic union a mere monetary union will entail bigger risks for a country like Finland and demand more domestic flexibility to ensure that adjustment does not happen through unacceptably high unemployment and loss of production potential.

However it is not only Nordic citizens who fear that increased unemployment could be the price of the EMU. The rigid adherence to the Maastricht timetable for a single currency did force governments to impose fiscal restraint which, although in itself both virtuous and necessary, could have been achieved with lesser social costs when implemented with a better regard to the principles of demand management.

Questions remain concerning the Stability Pact which could impose counter-productive fiscal tightening in a recession on governments even if their public spending is structurally in balance.

Of course we must also recognize the very political nature of the EMU. For some the political importance of the Euro in enhancing "ever closer union" allows them to disregard the economic and social shortcomings and risks of the exercise, but for many others the political implications tend to increase rather than diminish their euroskepticism.

Even supporters of the EMU will have to pay attention to public opinion. The legitimacy of not only the euro but also the whole European project could suffer with potentially negative consequences for the future unless the people of our countries approve and support the EMU.

The question of democratic legitimacy is a very fundamental one. It cannot be addressed adequately by the kind of public relations campaigns envisaged by the Commission with the aim of "teaching the people to love the Euro", to quote the memorable words of Commissioner de Silguy.

It can be argued that the first steps for European unity in the forties and fifties could only have been taken by far-sighted statesmen who did not hesitate to take the decisions necessary to establish the Community even if public opinion was not always initially ready to accept them.

But what was possible and necessary in the past cannot be repeated today without grave risks. The backlash in popular opinion after the Maastricht Treaty was signed was a timely reminder of this. All the rhetoric about learning the lessons of Maastricht notwithstanding the European Union with its treaties, institutions and projects remains too aloof from the concerns of our electorates.

I find the UK and Swedish position on the need for a referendum or some other form of popular mandate before joining the EMU understandable and reasonable. In Finland too we took the parliamentary debate and decision-making procedure for joining the EMU very seriously with the aim of securing a genuine commitment and public support for the decision.

Actually a full 80 % of the Finnish people thought prior to the final decision that Finland would join the EMU, irrespective of what their own opinion on the single currency was. It would be a mistake for any government to take this as a sign that it does not have to take into account what the people think. Rather it should be read as a disquieting indication of how little trust people have in the will of our democratic institutions to act according to the popular will. The proposal for the EU's Agenda-2000 was seemingly built on the premise that the introduction of the Single currency would not change the prevailing conception about the needs and priorities of European cooperation. Only some rather modest and limited proposals concerning tax harmonisation were presented as a consequence of monetary union.

This was always strange and untenable, given the fact that proponents of the EMU want it because they think it will enhance political union and opponents fear it for precisely the same reason.

To some extent this is explained by the fact that the connection between monetary and political union, which was very much part of the unannounced but nevertheless evident compromise between France and Germany prior to the adoption of the Maastricht Treaty did not really cover the consequences and problems of economic policy directly linked to the Single currency. Rather it represented a more general agreement to futher political union, particularly in the field of the common foreign and security policy.

It is clear that the introduction of the euro has irrevocably put political union with particular reference to finance and economic policy on the European agenda. The EMU will inevitably force new problems and challenges on our common agenda, even if not all of them are foreseeable today.

We must now start tackling the new agenda for Europe which the EMU has brought forth.

One of the problems which has been raised concern the lack of accountability of the European Central Bank. Even the formally most independent national central banks are in reality engaged in a continuous dialogue with their national governments responsible for other aspects of economic and finance policy for the currency area in question.

The ECB has no such European counterpart with authority to speak on the general lines of economic policy. That is why the role of the Euro-11 has to be clarified and strengthened to able it act with sufficient authority vis-à-vis the ECB.

The European Parliament should also play the same role towards the European Central Bank as the national parliaments have had in relation to the national banks.

It is also important for the ECB to agree on a much higher degree of transparency and openness in its dealings with other European institutions and the public. The track record of the ECB up to now and its refusal to publish its forecasts, minutes or voting records is not too encouraging.

One of the reasons why many people have had reservations about the EMU is the fact that notwithstanding the "E" in the EMU really means monetary union and not moch more. For the time being expectations concerning this remain limited, but not for long. We must prepare ourselves for an Agenda-2000-plus to meet the new challenges of monetary union.

While some people fear the EMU because they see it as an avant-garde for a federal Europe this is not readily apparent from Agenda-2000. The EMU will not turn the Finns into euro-federalists, but we do not want to shirk from the consequences of EMU and the need to strengthen European fiscal policies of a positive nature - that is going beyond the restrictive formula of the Stability pact - which must follow from the EMU.

A closer coordination of national financial policies is necessary in the EMU. Coordination cannot, however, mean one policy for all the euro-countries. The lack of national monetary policies means that finance policies must have more, not less, leeway to meet the diverging requirements of the business cycle which will continue to vary from country to country.

Monetary union has also put tax harmonisation on the agenda. Here again it cannot mean unification of tax rates and policies. Rather its should mean enhanced cooperation and binding decisions to eliminate harmful and distorting tax competition. The most pressing need is to reach agreement on minimum tax rates on capital incomes, energy and CO2-emissions.

The Swedish Prime Minister Göran Persson has proposed that the EMU should be complemented with some kind of community funding mechanism to even out possible asymmetrical external shocks which countries in the EMU no longer can use currency realignments to help their adjustment.

An example of such an external shock could be a situation where the Nordic forests be hit by some kind of "mad pine disease" which suddenly halved the amount of domestic raw material available for the industries concerned. But even less dramatic events could lead, in any EMU country, to serious problems, which no amount of internal flexibility could compensate without serious social costs in the short term.

Such a funding mechanism could not, of course, be a free lunch, but rather an insurance policy the costs of which would be born solidarily by all member states.

This is not a new idea. In fact the MacDougall Committee proposed to the commission already in the 1970's that the plans for monetary union should have included a financial compensation mechanism where the community would have reacted with compensatory income transfers to a country with a more-than-average increase in unemployment.

This kind of funding mechanism to counter asymmetric employment developments would not, according to some estimates, have to be more than 0,2 % of the EMU countries' GNP to equal about 40 % of the regional equalisation effect of the US federal budget.

There are many practical as well as political objections to such innovations. Nevertheless proposals like these are to be welcomed as part of the process of creative thinking we all need in Europe today.